That's "Sir James" to You Dyson, shown outside his research and design center in Wilshire, England, was knighted in 2006.

Courtesy Company

All Aboard Dyson (right) and his mentor, Jeremy Fry, work on a pedal boat constructed of spare bike parts, in 1968.

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Thirty-three years ago, James Dyson set out after an unusual dream: to create the ultimate vacuum cleaner. After thousands of prototypes, failed licensing deals, and countless fruitless meetings with distributors, he finally got his bagless vacuum into stores in Britain, then in the U.S.—and took both nations by storm. Still the sole owner of his company, Dyson, 64, explains how he turned that vacuum design into a billion-dollar business and why he still likes living on the edge—as long as it doesn't interfere with getting 10 hours of sleep every night. He spoke with Burt Helm.

I was brought up in the country. Both my parents were teachers, so I did classics and the arts at school. My father died when I was 9. I was the third child, which I think was lucky for me. My mother let me do what I wanted.

I went to the Royal College of Art to do design. That's when I discovered Buckminster Fuller. He worked on his own, developing these light, geodesic structures when everyone else worked with concrete. His inventions were slightly mad but very inspiring.

At college, I met a very creative engineer named Jeremy Fry. I asked him for money to build a Fuller-type building that I had designed for a theater in London. He said, "I'm not going to give you any money, but I'll give you a few jobs." One of those jobs involved an amphibious landing craft he'd invented.

We built the first prototype together. He pointed me to the welding gear and said, "Go do it." I'd never used any welding gear, so I asked him how it worked. He said, "You do it like this," and lit the acetylene torch, and then he buggered off to work. Here I was, this long-haired art student with a shiny purple raincoat bought on King's Road, and he was letting me make mistakes and learn things myself.

After we finished the prototype, I said, "Now what?" He said, "We make it." And then? "We sell it." It was simple as that. Soon, we were selling 200 boats a year.

I started working on the vacuum cleaner in 1979. I'd purchased what claimed to be the most powerful vacuum cleaner. But it was essentially useless. Rather than sucking up the dirt, it pushed it around the room. I'd seen an industrial sawmill, which uses something called a cyclonic separator to remove dust from the air. I thought the same principle of separation might work on a vacuum cleaner. I rigged up a quick prototype, and it did.

I became obsessed. It took five years of doing nothing but making and testing prototypes. My wife supported us by teaching art. She was wonderful. But most other people thought I was mad.

When the vacuum was ready, the first thing I did was to show it to the makers of domestic appliances. They didn't want it. I licensed it to Amway in the U.S., which was a disaster. So I decided to become a manufacturer myself. I borrowed $900,000, with my house on the line.

The first sale I made was to a mail-order catalog. I sat with the buyer all day. Right at the end, he said, "It's an interesting vacuum cleaner, but why should I take a Hoover or an Electrolux out of the catalog to put in yours?" I was at my wit's end. I said, "Because your catalog is boring." He called me cheeky—but said he'd take it. And then another catalog took it because I was in the first one. And then I got into one or two little stores.

I usually sell from the point of view of frustration, hoping that other people feel the same way. After that, I was like any other vacuum-cleaner salesman. I showed what it did, why it was different, and why it performed better.

The only way I got into the big British stores was because in 1995, the former British foreign secretary, Lord Howe, came to look around at the factory. He asked if there were any problems. I told him I couldn't get into Comet, which was our equivalent of Best Buy. He said, "Well, my wife's on the board!" The next day, we got a call from the purchasing director. Within a year, we were the best-selling vacuum cleaner in Britain.

I didn't enjoy being CEO that much. At an operational level, that becomes an enormous job, too big for me. I've never really been a businessman. I wanted to carry on the design and engineering myself. That's what I love doing.

I had to bring in outside talent in a major way. At the time, in 1996, I had no finance director, no production director. Martin McCourt became CEO in 2001. He launched Dyson in the U.S. and expanded our manufacturing. We developed a number of other vacuum cleaners, and we made the Contrarotator—a washing machine that used two drums spinning in opposite directions to mimic washing by hand. But we wound up losing money on it and had to stop production. It wasn't my decision, and emotionally, I wasn't ready for it. The products, they're like children.

We were growing fast, but in 2001, we were denied permission to expand our existing building. It would have cost us two years and millions of pounds to argue the case. We couldn't wait. Almost all of our components already came from the Far East. So it was utter logic to move production to Malaysia. It was a difficult decision. It meant 500 job losses. I'd never made people redundant before.

I love the independence of owning 100 percent of the shares, of having to think only about the products and not to worry about shareholders. In that sense, we're completely free.

I work hard when I'm at work. But when I get home, I don't speak on the phone, and I don't do e-mail. I try to get 10 hours of sleep. But I liked living on the edge. All those years that my house was in hock to the bank...I liked the danger, the idea that everything depended on getting that next product right in every way.